A story in today's Times says charities and companies working on back-to-work schemes with the work and pensions department have a clause in their contracts banning them from criticising minister Esther McVey

The Shaw Trust has said that a so-called "gagging clause" in a contract it holds with government does not affect its independence as a charity after it was named as one of the organisations that had been prevented by a contract clause from speaking out against universal credit.

The Times newspaper ran a front-page story today claiming that charities and companies working on back-to-work schemes with the Department for Work and Pensions had a clause in their contracts banning them from criticising Esther McVey, the work and pensions secretary, therefore rendering them unable to speak out about the impact of universal credit on their beneficiaries or customers.

The Shaw Trust was named by the newspaper as one of at least 22 charities and companies that had been required to sign up to a clause in government contracts dictating they must "pay the utmost regard to the standing and reputation" of the department and must not do anything that might damage the reputation of the department or attract adverse publicity to it.

The paper highlighted the controversy about the introduction of the universal credit scheme and said organisations including charities were being prevented by the clause from criticising the scheme.

But asked if the clause in the contract affected the charity’s ability to speak out, a Shaw Trust spokesman said: "This is a standard DWP contract that does not impinge on our independence as a charity."

So-called gagging clauses are not new in government contracts and organisations such as the policy and publishing charity the Directory of Social Change have long been calling for an end to their use.

Jay Kennedy, director of policy and research at the DSC, told Third Sector today that the "absurd gagging clauses" put political reputation management above the interests of the people that programmes were supposed to help.

"It's counter-productive and symptomatic of a dysfunctional system where the contractor holds all the cards and dictates the terms," he said. "The overall impression created is of a fearful, authoritarian hostility to pluralism in a democracy."

Kennedy said that just because the clauses were standard practice did not mean they should be acceptable.

"These are extremely tough choices for charities because the risk of pushing back is that people go without the help they need," he said.

"But collectively we've got to start saying no to bad contracts and clauses that conflict with our values, ethics and legal obligations as charities."

A spokeswoman for the Department for Work and Pensions said the clauses were designed to protect commercially sensitive information and did not prevent organisations from speaking out on certain subjects.

"As with all arrangements like this, they include a reference that enables both parties to understand how to interact with each other and protect their best interests," she said.

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